Turkish company cancels hydro electric project in Georgia

Turkish company cancels hydro electric project in Georgia

TBILISI, DFWatch – Work to construct one of the biggest hydro electric power stations in Georgia has been halted, after its Turkish investor pulled out.

The Georgian government explains that the Turkish investor refused to go through with the project, and therefore a new competition has been announced to find an investor that is willing to finance it.

This project should be implemented on the river Rioni in western Georgia. The river starts on the south slopes of the Caucasus range, 2 960 m above sea level and ends near the Black Sea port of Poti.

Its full length is 327 km, and the basin area is 13 400 km. It has terraces, the height of which is from 2-3 to 20-15 mm, the length 2-3 km and several hundreds of meters of width. It is fed by glaciers, snow, rain and underground waters and has several tributaries.

From before, the following hydro electric stations have been built on the river: Rioni Hess, Gumat Hess I, Gumat Hess II, Vartsikhe Hess. There have also been built power stations on the tributaries: Ladzhanur Hess, Shaor Hess, Tkibul Hess.

The government several years ago decided to implement several new power stations on the Rioni, collectively called the Namakhvan cascade. The project aims to build three hydro electric stations with a total capacity of 450 MW. It will consist of three power stations:

There are also plans to build transmission lines in conjunction with these power stations. It will need 800 million dollars of investment for all these together and the construction period is 5 years.

Several investors have previously showed interested in implementing the project and have signed an agreement, but several times the agreement it was dissolved.

In December 2009 a memorandum of understanding was signed between the Georgian government and a Turkish-Korean consortium. The consortium took on the obligation to start the construction work of the cascade in 2011 and invest up to a billion dollars to implement the project.

The consortium consists of the Turkish company Nuroli, and Korean Companies KEPCO and SKE&C United. But the highly experienced Korean energy company KEPCO unexpectedly left the consortium.

Now it seems that the Turkish company also has refused to implement the project, because the government is now seeking a new investor.

In a statement published on its webpage, the Georgian Energy Ministry invites a new investor to implement the project. Specifically, the Georgian the Oil and Gas Corporation affiliated company Namakhvan Hesebis Kaskadi announced expression of interest to buy design, supply and construction services.

One of the main criteria to choose the contractor will be the experience of successfully implementing similar projects, which means reservoir type hydro power stations with installed capacity of 200 MW and above. Candidates should submit the necessary documentation by April 2, 2012 at the office of Namakhvan Hesebis Kaskadi.

Environmental activists are against this project. Manana Kochladze, the head of the non-governmental organization (NGO) Green Alternative says that 14 villages will be affected if the cascade is built, and nearly 800 people will be resettled. 924 hectare of land will be flooded, including agricultural lands which are actively cultivated. Also, 270 ha of woods is affected. Khvamli Reservation will also be affected, which is 100 meters from the Tvishi reservoir.

According to the same source, 17 architectural and 23 archaeological monuments will end up under water.

“There are caves which have high cultural importance. The reservoirs will be created 27 km along the Rioni river, which means that the ecosystem of the river will completely changed. The climate will also be changed and winds will increase,” Manana Kochladze says.

She says the seismological and ecological risks are not shown in the plan documents. The region is seismologically active and power stations on this territory should be able to withstand earthquakes of 7-8 on the Richter scale. The increased mass from dammed water will cause more landslides, something there already is enough of in this region. Erosion will accelerate under the Namakhvani cascade. It should be noted that the Turkish investors promised to build terraces to avoid landslides.

Nino Ckhobadze, head of the Green Movement, says that the Namakhvani project is technically unjustified. In addition, she says Georgia won’t receive any profits from this project, because Turks would transfer the energy generated from this power station to their own country.

“The project is technically unjustified. This is a 1970s-1980s type project. Yet the Soviet Union refused to implement it. Since then it hasn’t changed. In fact, the power station will be built by using old technologies which were rejected in Turkey. I am interested, if Turks will not build power stations in their own country by using these technologies, why should it be built in Georgia, where the risk factors are really high at least in the seismological regards?” asks Nino Chkheidze.

She says the former investors even promised compensation for part of the population. It seems the conclusions of the geologist finally scared away the investors; due to fear that they would have been giving away solid finances to satisfy so many requests: resettlement of the population, giving compensations, building terraces and other ameliorating measures.

The second problem is the refusal of the investors to implement the projects. The government says that the investments are increasing annually, but the statistics and the international ratings say the opposite.

At the beginning of February, Bloomberg, based on data from the World Bank and the International Monetary Fund, published a list of 15 countries which will be convenient for investors for the next 5 years. Georgia is not on the list.

On a rating published in January regarding economic freedom, Georgia was labeled a mainly free to moderately free country. In the 2012 rating of economic freedom, Georgia is on 34th place place, while last year the country was on the 29th place.